As I discussed in my last column, the Worker, Retiree and Employer Recovery Act of 2008 (WRERA) signed into law on Dec. 23, 2008 suspended required minimum distributions (RMDs) from company retirement plans and IRAs in 2009. Although RMDs were waived in 2009, some took them anyway. If they realized their mistake within 60 days, they could roll the funds back to an IRA plan (providing they were eligible) and eliminate the tax bill. But many didn't recognize this until it was too late. Despite not wanting to keep the distributions, it appeared they'd get no relief.

But a new IRS ruling can help some taxpayers put unwanted RMDs back. On Sept. 24, the IRS released Notice 2009-82, granting taxpayers an extension for rolling over unwanted distributions. Under this rule, RMDs that have already been received may be rolled over until Nov. 30, 2009 or within 60 days of the withdrawal, whichever is later.

When a taxpayer receives a distribution from an IRA or qualified retirement account, he or she can roll over that distribution to another retirement account within 60 days. For years this deadline was firm, but in 2001, the Economic Growth and Tax Relief Reconciliation Act (EGTRA) gave the IRS the ability to extend the deadline. Using this authority, the IRS extended the rollover deadline for would-be RMDs taken in 2009.

Those RMDs don't have to go back to the same accounts they came from. In some cases, particularly with 401(k) plans, it may even be impossible.

Notice 2009-82 affects individuals who normally would have been subject to RMDs from either a company plan or an IRA. Taxpayers receiving annuity payments from a qualified plan calculated over their lives alone, or their lives jointly or over a period of at least 10 years, also qualify for relief.

WRERA suspended RMDs for participants and beneficiaries alike. But the new relief applies only to plan participants and IRA owners, so it won't be help to beneficiaries.

To understand why, remember that the relief provided by the IRS was made possible by its ability to extend the 60-day rollover window. Under current Internal Revenue Code provisions, non-spouse beneficiaries can't do a 60-day rollover, so the extension of this period has no effect on them.

ONCE AND DONE?

A taxpayer may make only one 60-day rollover per 12 months from each of his or her IRAs to another IRA. Before putting back an RMD, make sure your client hasn't done any rollovers in the past year. For example, if Mary did a 60-day rollover from her IRA on March 15, 2009, she isn't eligible to do another until March 15, 2010.

One complication is that many individuals receive their RMDs in smaller payments throughout the year. Often, it takes several months for the IRA owner to realize that these distributions could be stopped. For them, the new relief may not be as beneficial.

So why can't these clients total up all IRA distributions and roll them back in one big check? One check, one rollover. Problem solved. Not really. A rollover isn't determined by how many times IRA funds are put back in, but by how many times they're taken out. For example, John has done no other rollovers within the past year and received monthly RMDs of $10,000 from January to March of this year. He can only roll $10,000 back to his IRA, not the full $30,000. If he deposits one check for the $30,000, he goes instantly from zero to three rollovers.

The one-rollover-per-year rule applies to distributions made from each IRA to another IRA. Distributions from a company plan rolled to any eligible account don't count toward this. There are two classes of individuals who are eligible for relief under Notice 2009-82: IRA owners who can roll only one distribution back into an IRA and plan participants who can roll over all distributions.

Where does that leave IRA owners who took multiple distributions? They can roll the funds from an IRA to a company plan or convert IRA funds to a Roth IRA. Even if the taxpayer didn't qualify to convert to a Roth, the funds could be recharacterized. Using either method doesn't appear to violate the once-per-year rule, but the IRS notice does not specifically address them.

WHY ROLL?

We know who can roll over unwanted RMDs. A better question is who should roll over their RMDs? Rollovers are the right move for several types of clients:

* Clients looking for tax deferral. Clients who reinvested distributions in taxable accounts may want to consider rolling the money back to an IRA. The gains (and losses) in a taxable account will still be recognized as investments are bought and sold, but inside an IRA the gains aren't taxed until withdrawn.